Inflation spirals to 16-year high, touches 12.63 percent (Lead)

New Delhi, Aug 21 (IANS) India’s annual rate of inflation zoomed to a 16-year high of 12.63 percent for the week ended Aug 9, as compared to 12.44 percent the week before, but an unfazed finance ministry said prices had stabilised.”Prices of essential commodities, which include food grain, pulses, edible oil, vegetable, dairy products and some other products including kerosene, soap and safety matches have more or less stabilised,” the finance ministry said in a statement.

The official wholesale price index (WPI) released by the ministry of commerce and industry Thursday showed an increase of 0.3 percent in the index for food article, while that of textile group rose 1.6 percent.

Non-metallic index products rose 0.3 percent.

The increase in index for food articles was due to higher prices of masoor dal (3 percent), tea, moong and gram (2 percent each) and milk (1 percent).

The index for manufactured products like mustard oil rose 0.2 percent while that of rubber and plastic products by 0.2 percent.

The index for non-food articles group like sunflower, raw rubber and cotton declined by 0.6 percent and the index for chemical and chemical products like benzene declined by 0.1 percent.

The ministry said the WPI for all commodities stood at 236.9 as compared to 236.1 (provisional) for the week ended June 14 and annual rate of inflation based on final index, calculated on point-to-point basis, stood at 11.8 percent as compared to 11.42 percent (provisional).

The finance ministry in a statement said inflation rate for 30 essential commodities stood at 6.74 percent for the week ending Aug 9, compared to 6.54 percent for the week before.

Earlier Thursday, Planning Commission Deputy Chairman Montek Singh Ahluwalia said the problem of inflation was short term and would moderate in due course, as the government has taken several monetary and administrative measures to rein in inflation.

“Inflation will moderate. Let’s have patience,” Ahluwalia said.

Ahluwalia also brushed aside apprehensions that the government’s recent decision to hike employees’ salaries would have any adverse impact on the country’s economy.

“We will be able to deal with any implications (arising out of the salary hike),” he said.

The Prime minister’s Economic Advisory Council (EAC), in its “Economic Outlook Report 2008-09″, has predicted a 7.7 percent economic growth in the current fiscal, as compared to 9.1 percent last fiscal.

Former Reserve Bank of India (RBI) governor C. Rangarajan, while releasing the EAC’s economic outlook report here Aug 13, said inflation would moderate to 8-9 percent by March 2009.